European stocks are marginally higher on Friday, as investors continue to digest the dovish message from the European Central Bank which suggested it could cut rates coon in order to tackle a slowdown in the euro zone economy. The central bank held interest rates unchanged, but Draghi pledged to ease monetary policy further as the growth outlook deteriorates. Meanwhile, investor sentiment turned positive ahead of the US-China trade talks which resume on Monday. In individual stocks, France’s Sopra Steria Group surged over 11% after the company raised its organic revenue target for 2019.
Against this backdrop, the UK’s FTSE 100 adds 0.59 per cent to 7533, Italy’s FTSE MIB sheds 0.47 per cent to 21,800, France’s CAC 40 rises by 0.51 per cent to 5,606, while German DAX 30 adds 0.31 per cent to 12,400. US stock index futures are moving higher ahead of the official open in Wall Street.
After come consolidation earlier in the day, dollar demand reemerged, with USD is rising against major rivals again. EURUSD struggled to challenge the 1.1150 local resistance and was rejected in this area, down to 1.1130. Germany revealed another portion of weak economic data – import prices plunged by 1.4% versus -0.8% expected.
As traders digest the dovish message from the ECB, market focus gradually shifts to the upcoming FOMC meeting due next week. As a rate cut by the Federal Reserve has been priced in already, the potential downside pressure around the greenback could be short-lived. So the outlook for EURUSD remains cloudy so far. Moreover, any signs of progress in the US-China trade talks could cool Fed rate cut expectations and lift the dollar across the board early next week. AS a result, the 1.11 figure remains at risk, while chances of a break above the 1.12 barrier are low so far.
Oil prices resumed the upside move on Friday but still lack the impetus to challenge the $64 barrier which caps bullish attempts these days. Traders struggle to push prices higher as concerns over the persistent oversupply remain, in addition to worries about global demand amid further signs of slowing economy. Later in the day, Brent will focus on Baker Hughes data as another decline in oil rigs could support the upside attempts. Should dollar demand abate during the evening trading, the futures could finish the week marginally higher. On Monday, traders will shift focus to the US-China trade talks and will closely monitor developments on this front in terms of any progress towards a deal.
Nathan Lambert, Head of Global FX Analytical Department